Low Tax Regime
A low taxation environment has been in place for some years to encourage inward investment and expansion by local business, and will be maintained for the foreseeable future. Corporate income tax is capped at 25 per cent, while a special 15 per cent rate is available for certain categories of manufacturing and all companies operating within the jurisdiction of the International Financial Services Centre (IFSC).
Botswana Financial Service Center (BIFSC)
The health of Botswana's macroeconomic environment and the introduction of an entirely liberalized foreign exchange regime are key factors in the thinking behind the government's establishment of the International Financial Services Centre (BIFSC).
Set up in 2000, its role is to stimulate the growth of cross border financial services from Botswana in currencies other than the Botswana pula (BWP).
Since 1999, the government has enacted legislation to provide the tax incentives, approval processes and regulatory structure necessary to create a genuinely international service centre. Legislation is in place to help prevent money laundering and associated white-collar crimes, as well as to ensure the integrity of international financial services operations. Provisions on the prevention of concealment and disposition of the proceeds of crime have been strengthened.
As a result, it is now mandatory for banks and all other commercial firms to report any suspicious business relationships and transactions involving the transfer of cash into and out of Botswana, subject to stringent penalties. The tax incentives include:
For more information on BIFSC, visit www.botswanaifsc.com.
Botswana has one of the simplest and comprehensive tax regimes in the world. Corporate tax rates in Botswana are the lowest in the SADC region at 15% for all manufacturing concerns and all companies operating within the jurisdiction if the BIFSC and 25% for other non-manufacturing. The 15% manufacturing tax comprises of 10% additional tax and 5% basic company tax. VAT is imposed comprehensively on an end-user basis and the rate of 10% on standard rated supplies and 0% on zero-rated supplies. The personal tax regime is based on taxable income brackets.
Source: World Bank, World Development Indicators, 2005
Source: BURS, Incentives to Investment in Botswana: An Income Tax Perspective
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